Medicare's Hospital Value-Based Purchasing Program Values Quality over QALYs.

Area of Science:

• Health economics
• Healthcare policy
• Quality improvement

Background:

• Medicare's Hospital Value-Based Purchasing (HVBP) program integrates quality of care measures with episode spending.
• HVBP incentivizes hospitals to reduce mortality or spending, creating a tradeoff between these two objectives.

Purpose of the Study:

• To estimate the implicit tradeoffs between mortality reduction and spending reduction within the HVBP program.
• To quantify these tradeoffs in terms of quality-adjusted life-years (QALYs).

Main Methods:

• Analysis of quality performance and earned points for 2814 hospitals using publicly available data.
• Quantification of spending-mortality tradeoffs using QALYs.

Main Results:

• The tradeoff in HVBP was approximately $1.2 million per QALY.
• This value is significantly higher than the generally accepted range of $50,000 to $200,000 per QALY for high-value health interventions.
• HVBP overvalues quality improvements compared to spending reductions.

Conclusions:

• The current incentive structure in HVBP may not align with optimal value-based care.
• Policy adjustments are proposed to better balance incentives for hospitals to deliver high-value care.